Arthur J. Gallagher (AJG) Q4 Earnings Top, Revenues Miss
Arthur J. Gallagher & Co. AJG reported fourth-quarter 2020 adjusted net earnings of 88 cents per share, which beat the Zacks Consensus Estimate by 14.3%. Moreover, the bottom line increased about 51.7% on a year-over-year basis.
The company’s performance was driven by lower expenses, higher adjusted revenues, and strong margin expansion across Brokerage as well as Risk Management segments.
Operational Update
Total revenues were $1.7 billion, down 1.2% year over year, primarily due to higher commissions, fees, and supplemental and contingent revenues. Moreover, the top line missed the Zacks Consensus Estimate by 0.2%.
Arthur J. Gallagher’s total expense decreased 4.1% year over year to $1.6 billion, attributed to lower compensation.
Adjusted earnings before interest, tax, depreciation and amortization and change in estimated acquisition earnout payables (EBITDAC) grew 26.4% from the prior-year quarter to $368 million.
Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise
Arthur J. Gallagher & Co. price-consensus-eps-surprise-chart | Arthur J. Gallagher & Co. Quote
Segment Results
Brokerage: Adjusted revenues of $1.2 billion increased 4.5% year over year on higher commissions, fees, and supplemental and contingent revenues.
Adjusted EBITDAC climbed 29.6% from the prior-year quarter to $373 million while margin expanded 580 basis points (bps) to 29.9%.
Risk Management: Adjusted revenues were down 0.1% year over year to $216.4 million.
Adjusted EBITDAC increased 11.3% year over year to $41.4 million while margin expanded 190 bps to 19.1%.
Corporate: EBITDAC was negative $46.4 million compared with negative $33.9 million in the year-ago quarter.
Financial Update
As of Dec 31, 2020, total assets were $22.3 billion, up 13.7% from the 2019-end level.
Cash and cash equivalents at year-end increased 36.2% from the 2019 level to $3.6 billion.
Shareholders’ equity increased 19.5% from Dec 31, 2019 to $6.2 billion as of Dec 31, 2020.
Acquisition Update
In 2020, the company closed 27 acquisitions, with estimated annualized revenues of $251.4 million.
Zacks Rank
Currently, Arthur J. Gallagher carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies TRV, W.R. Berkley Corporation WRB and Brown & Brown BRO beat earnings estimates.
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